The study found that around one in three UK adults (34%), equivalent to 18.7 million people, either expect to pay housing costs in retirement or are already doing so.
Among the roughly 16 million people who expect future housing costs in retirement, four in 10 (39%) said they do not know how they will cover their rent or mortgage once they stop working.
The findings come as rising housing costs and longer mortgage terms increase the likelihood of people entering retirement still paying for their homes.
Younger borrowers are especially exposed, with some taking out mortgages stretching to 40 years.
Meanwhile, Bank of England data recently showed low-deposit mortgage lending has risen to its highest level since the financial crisis.
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Renters and younger adults most exposed
Renters face the greatest challenge, although a significant proportion of mortgage borrowers also expect to carry housing costs into later life.
Six in 10 renters (61%) anticipate having housing costs in retirement, compared with 37% of mortgage holders. Nearly half of renters (45%) expect to be paying rent for more than a decade after retirement, while only 7% of mortgage borrowers believe they will still be making repayments for that long.
Younger adults are particularly affected. More than four in 10 (44%) people aged 18-34 expect to face housing costs in retirement, compared with 24% of those aged 50-69.
On average, homebuyers aged 18-34 have an original mortgage term of 31 years, with 43% taking out mortgages lasting 35 years or more. By contrast, just 2% of current retirees originally borrowed over a term of at least 35 years.
Pressure on retirement finances
Royal London’s research suggests housing costs can have a substantial impact on retirement preparedness and long-term financial resilience.
Those expecting to pay housing costs in retirement have average pension savings of £34,948, compared with £120,682 among those who do not expect such costs. Across all respondents, average pension savings stood at £93,221.
The study also found a clear link between financial vulnerability and the likelihood of facing housing costs in retirement. Nearly six in 10 (59%) people who describe themselves as being in financial crisis expect to be paying rent or mortgage costs in retirement, compared with just 11% of those who say they are financially comfortable.
Regional differences emerge
The likelihood of paying housing costs in retirement varies across the UK.
People in London, the South East and the South of England are among the most likely to expect housing costs in later life, with 34% saying they anticipate still paying rent or a mortgage after retirement. This compares with 23% in Yorkshire and the Humber.
Meanwhile, more than half (53%) of people in the North East who expect housing costs in retirement say they do not know how they will pay them, considerably higher than the UK average of 39%.
Sarah Pennells, consumer finance specialist at Royal London, said: “For generations, reaching retirement often meant reaching the point where housing costs were behind you. But for millions of today’s retirees and future retirees, that simply isn’t the reality.
“Whether it’s renting for longer, taking out larger mortgages or stretching repayments over decades, more people are approaching retirement still facing significant housing costs.
“What’s particularly worrying is that over six million people who expect to pay rent or mortgage costs in retirement don’t know how they’ll cover those payments.
“If you’re heading towards retirement and expect to have housing costs, it’s important to factor these into your retirement planning as early as possible.
“Housing costs can make a huge difference to how far retirement income will stretch. Understanding what your housing costs could look like in later life can help you develop a more realistic picture of the income you’ll need in retirement.”
